Pakistan’s oil refining industry has raised serious concerns over the financial challenges arising from the Finance Act 2024, which changed the sales tax status of petroleum products from zero-rated to exempt supplies—a shift that significantly impacts the industry’s tax treatment.
The country’s leading refineries have warned that this policy change is undermining their financial viability and threatening ongoing and planned refinery upgrade projects.
In a joint letter dated March 4, 2025, the Chief Executive Officers (CEOs) and Managing Directors (MDs) of Attock Refinery Limited (ARL), Cnergyico PK Limited (CPL), National Refinery Limited (NRL), Pak-Arab Refinery Limited (PARCO), and Pakistan Refinery Limited (PRL) formally urged Federal Finance Minister Muhammad Aurangzeb to intervene and reverse the policy.
They emphasised that the exemption has led to the disallowance of input sales tax claims, causing a substantial rise in operational and capital costs. This, in turn, is adversely affecting infrastructure development and critical refinery upgrade projects needed to modernise Pakistan’s refining sector.
The refineries argued that the sales tax exemption contradicts the Brownfield Refining Upgradation Policy, which was approved in August 2023 to incentivise refinery modernisation and attract investment. They cautioned that if the exemption remains in place, it will erode profits, delay projects, and weaken the already struggling refining sector, which faces operational and financial challenges due to outdated infrastructure and fluctuating global oil prices.
The refinery operators disclosed that they have been raising the issue with the Ministry of Energy – Petroleum Division (MEPD), the Oil & Gas Regulatory Authority (OGRA), and the Federal Board of Revenue (FBR) for the past seven months, but no resolution has been reached. They warned that the continued delay is exacerbating the financial crisis for refineries and discouraging future investment in the sector.
In their letter, the refinery CEOs and MDs formally requested an urgent meeting with Finance Minister Aurangzeb to discuss the issue and find an immediate solution. They reiterated that Pakistan’s oil refining industry is at risk of severe financial distress and that swift government intervention is crucial to prevent lasting economic damage.
The letter has also been forwarded to the Minister for Energy – Petroleum Division, the Secretary of Petroleum Division, and the Chairman of OGRA, urging them to step in and ensure that Pakistan’s refining sector does not suffer irreversible financial setbacks. The refineries called on the government to prioritise financial stability in the industry and safeguard ongoing and future refinery expansion projects that are essential for the country’s energy security and economic growth.
